Federal Deposit Insurance Corp. Chairman Sheila Bair said the crisis stemmed in large part from "disengaged" and shortsighted executives whose activities "sowed the seeds" of their institutions' failures.
In a speech Thursday to the Boston Club, Bair drew no line between managers at the hundreds of small banks her agency has resolved and the behemoths that would have failed if not for huge government bailouts. While there were "several examples" of good leadership, she said, other managers were just interested in short-term gains.
"They didn't do their homework, they didn't understand the risks their companies were taking, and they didn't work hard enough. Some were arrogant," she said in prepared remarks.
"At larger institutions," Bair added, "some managers assumed that their size protected them from regulatory or market sanctions — that they were so systemically important and interconnected that they were too big to fail. And some of them proved to be right."
She said many managers "were not hands-on" and did not "look beyond their next quarter's financial statements."
"It's an important lesson for investors, shareholders and of course boards, who ultimately are responsible for hiring the CEO, and making sure that the CEO and other senior managers are up to the job, and doing their job," Bair said.
